Accredited Wealth Management Advisor Practice Exam

What responsibility does FINRA have regarding firms' advertising?

1. To examine prospectuses

2. To provide insurance of members' accounts

3. To review advertising and sales literature

4. To monitor insider trading

The correct answer is: To review advertising and sales literature

The Financial Industry Regulatory Authority (FINRA) has a critical role in ensuring that firms engage in fair and truthful advertising practices. One of its primary responsibilities includes the review of advertising and sales literature to ensure that communications with the public are accurate, not misleading, and comply with regulatory requirements. This process helps protect investors from potentially deceptive marketing strategies and ensures that firms present information in a clear and compliant manner. Unlike other functions, such as examining prospectuses or providing insurance for member accounts, which fall under different regulatory bodies or institutions, the review of advertising directly aligns with FINRA's mission to maintain market integrity and protect investors. Furthermore, monitoring insider trading is primarily under the purview of the SEC rather than FINRA, which focuses more on broker-dealer firms’ operations and communications. Thus, the correct answer reflects FINRA’s specific responsibility in overseeing advertising practices within the financial industry.